The presentation briefly covers all the aspects plus some other stats of the Alibaba case published through people at IIM Bangalore. It gives a description of the Business model and the Ecosystem of Alibaba as well as how it expanded to earn a global reputation. Team Members - Pranjal Garg, Omkar Kate, Soumen Kumar Hazra

1. ALIBABA
Building a Social Sustainable Ecosystem
for E-Commerce
Group – 7A

2. “ I believe the spirit of transparency and equality
at the heart of the Internet will make it possible for
the Chinese society to leapfrog in its development
of a stronger institutional and social infrastructure.
That’s why we built Alibaba as a ‘social business’
from day one”
- Jack Ma, Founder of Alibaba Group
2

3. E-Commerce in China
The Inclusive Growth Model
3

4. Reform and Opening up Policy
• China Launched reforming
and opening up Policy in
1970’s
• This was done to accelerate
the growth of the Economy.
• Before this China has issues
such as –
1. Scarce Capital.
2. Abundant Labor.
3. Outdated Technologies.
• However, since China was a
Transition Economy Basic
Pre-requisites were absent.
• These included –
1. Property Rights Protection.
2. The Rule of Law.
3. Efficient Price Mechanism.
• The state played a role in
amending those laws to
promote faster economic
development.
4

5. Impact of the Reform Policy
5
82%
18%
1978
Rural
Population
Urban
Population
44%
56%
2015
Rural
Population
Urban
Population
Urbanization in China after Reform Policy
33%
67%
Migrant Workers
Manufacturing
Other
Migrant Workers in Mfgd. in 2016 (in Million)
E-Commerce growth in China
China experienced an
average download
speed of 28 megabits
per second (Mbps), an
almost 50 percent
increase from 2017

6. 0
2
4
6
8
10
12
14
16
2000 2001 2002 2003 2004 2005 2006 2007
% GDP Growth Rate of China

7. Opportunities seen by Jack Ma
• Bureaucratic process was expensive & of limited scope for small businesses
• Sufficient demand for Chinese products in foreign markets
• Limited online presence of Chinese companies
• Started China Yellow Pages to facilitate Chinese companies to be discovered
by foreign enterprises searching for Chinese products
• Later in 1999, Jack Ma started Alibaba to facilitate trade by Chinese small
businesses that were trying to export their products to global market
BACKGROUND
JACK MA – FOUNDER OF ALIBABA
• Jack Ma began his entrepreneurial journey from 1995
• Established small business in translational services in early career and faced
bureaucratic challenges
Secret for success
• Finding gaps
 Institutional
 Information
 Market
 Logistics
 Finance
• Converting them into
business opportunities

8. 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17
Founding of
Alibaba
Positive
profit gained
of B2B
Founding
of Taobao
Independent
Operation of
Alipay
M&A of
Yahoo
China
IPO of B2B
in Hong
Kong
Launch of
Taobao Mall
Launch
of Aliyun
Mega
Taobao
Strategy
Mega
Alibaba
Strategy
Strategies of
Platform,
Financing &
Data
IPO in
NY
3 future
strategies
Stage 1
Stage 2
Stage 4
Stage 3
Evolution of Alibaba during 1999-2017

9. First Phase (1999-2003)
Alibaba.com, the business to business (B2B) trading platform
came into being with explicit objective to facilitate easier access
for Chinese small businesses to foreign trade
• Timely entry : China became member of World Trade
Organization in 2001
• Huge hit among the small businesses
• Chinese Government showed an open attitude towards e-
commerce
• In 2002 Ebay entered Chinese Market by acquiring EachNet
• Ebay made successful business out of consumer to consumer
(C2C) online bidding & buying
• In 2003, Ebay’s market share was 85%
• Jack Ma decided to get into C2C business

10. Second Phase (2003-2008)
Taobao, C2C platform of Alibaba started in May 2003
Three important strategies to make Taobao successful:
1. No fee strategy
• No fees & commission incurred by sellers
• eBay continued charging commission
2. Establishment of Alipay in 2003
• Third party escrow service
• Payment reached sellers only after buyers were satisfied
• eBay used direct payment of PayPal
• Buyers exposed to asymmetric risk of information in eBay
3. Introduction of chat service Ali Wang-Wang
• Enabled buyer seller communication
• Allowed negotiation and after-sales services
• eBay prohibited this & penalized off-platform transactions
“eBay maybe shark in ocean, but I’m crocodile in the
Yangtze river. If we fight in the ocean, we lose, but if
we fight in the river, we win.”
-Jack Ma
Year Taobao eBay
2003 0% 85%
2005 70% 24%
2008 > 85% < 1%
VS

11. Second Phase (2003-2008)
• Businesses found that selling on Taobao was easiest way to reach consumers
• B2C transactions on C2C platform
• China average GDP growth rate of >10% between 2000-2008
• Increase in employment opportunities, domestic demand had picked up
• Annual household per capita expenditure increased
• Traditional way of business:
• Physical infrastructure
• Distribution & logistics facility
• Online business eliminated these needs
• Eliminated layers of middle men
• Online retail sales grew steadily in China
0
2
4
6
8
10
12
14
16
2000 2001 2002 2003 2004 2005 2006 2007
% GDP Growth Rate of China
0
500
1000
1500
2000
2500
3000
3500
2001 2002 2003 2004 2005 2006
Expensive & in short supply

12. THIRD PHASE (2008-2014)
• State owned banks focused on lending to large businesses
• Small businesses were starved of funds
• Sellers needed marketing, logistics & storage facilities
• To help small businesses, Jack Ma made Ecosystem Strategy
• Alibaba engaged and partnered with many third-party
service providers that included:
 Distribution channels
 Financial services
 Website Design
 Training
 Management & Technical consultancy
 Warehousing
 Logistics
 Marketing
• These service providers themselves became customers of
platform.
• Thus sellers and service providers became interdependent
leading high-volume transactions.
Service
Providers
Sellers
Buyers

13. THIRD PHASE (2008-2014)
B2CC2C
Technological challenges due to fast growth
• Security & Risk Control for transactions and accounts
• Extreme demand for extraordinary computing capacity
• A technological company founded in 2014
• Utilized the data of online transaction and payment to develop a totally unique
credit rating system
• A wide range of financial services for consumers and small businesses was
developed through this
• Created in 2013 as a joint venture
between Alibaba and its partners
• Developed Internet of Things to
make online package service more
efficient
C2C + B2C

14. • Alibaba’s revenues surpassed some of the largest
global companies in 2014
• Size of business and volume of sales necessitated
Alibaba to upgrade it’s technologies
• Focused more on building and exploiting Aliyun’s
cloud computing and Ant Financial’s fintech
capabilities
• Goal to transform into a Technology Company
• Huge amount of data on Alibaba platforms
enabled to offer more value added services to
consumers & businesses through Aliyun
• Alibaba typically charged for these services, hence
contributing to revenue significantly
FOURTH PHASE (2014 - PRESENT)

15. FOURTHPHASE(2014-Present)

18. Jack Ma announced 3 strategies for Alibaba,
during its IPO in New York Stock Exchange in
2014
• Globalization
• Big Data & Cloud Computing
• E-Commerce in Rural Areas
Jack Ma believed that world was evolving
from the IT era towards the new era of Data
Technology, in which data will be most
essential output for an innovative society

19. Taobao Villages

20. It’s not just about making money. It’s about
making “healthy money” – sustainable
money that’s not only good for shareholders
and employees, but is also good for society,
as it enables people to live better lives.
-- Jack Ma

21. Impact of TaoBao Villages
21
• In 2010, Alibaba’s researchers identified significant
economic activity in villages, which were transacting on
Alibaba’s Taobao and Tmall.
• To capture this opportunity in rural china, Alibaba came
up with concept of “Taobao Villages” in 2013.
• A village was qualified to be a Taobao village if -
- The number of households enlisted in Taobao and Tmall
were more than 100 or greater than 10% of size of village.
- Annual revenue from online sales from that village
exceeded RMB 100 million
• These Taobao villages were concentrated in developed
areas of east coast with Zhejiang, Guangdong and
Jiangsu having largest number of Taobao villages
followed by Shandong, Fujian and Hebei.
• The distribution of Taobao villages was highly correlated
with spatial pattern of china’s industrial clusters,
transportation and logistics facilities.
• It is estimated that every online store in Taobao villages
produced on an average 2.8 direct job opportunities
along with many indirect jobs like tailors, carpenters,
delivery men, etc.
• By the end of 2016, more than 8.4 lac direct job
opportunities were created by Taobao villages.

22. Rural Taobao
22
Seeing great success of Taobao villages, Alibaba decided to create more such
villages and thus came “Rural Taobao” in collaboration with local
governments.
Three-pronged strategy to enforce rural strategy –
• Bring convenient and affordable goods and services to rural areas
• Provide support to develop an ecosystem for sustainable development of
rural economy and society
• Help rural areas to build infrastructure of e-business, including trade,
logistics, finance, cloud computing, data, etc.
Jack ma invested RMB 10 million in 3- 5 years to establish 1000 county
service centers and 1 lac village level service stations.
• Taobao university held many seminars & training sessions to
help rural people understand online buying and starting their
online businesses.
• They worked with logistic service providers to open rural
logistic channels through subsidy.
• Cainiao network-built distribution network with access to 95%
districts and counties in country.
• Ant financial connected more than 2300 rural financial
institutions that gave credit to more than 1.8 lac small and
micro corporations in rural areas.

23. Patent and Technology Management at Alibaba
23
• There has been an increase of 251 % in the no.
of patents filed by Alibaba in 2019 as compared
to 2018.
• Also in 2017, more than 10 percent of the
worldwide patents filed for Blockchain were by
the Alibaba Group.
Sources –
blog.relecura.com
www.statista.com

24. E-Commerce in India

25. 25

26. Can established E-Commerce
Players in India repeat
Alibaba’s performance in
China ?
Porter’s Fiver Forces gives an
overall view of how difficult it
would be for the Indian
E-Commerce Companies to Repeat
Alibaba’s performance.
26

27. What should be the role of the Indian Government and other institutions in creating a
conducive e-commerce environment ?
Ensuring a Level Playing field into the E-commerce
Market to encourage healthy Competition.
Improving the connectivity especially in Rural
Areas as was the case with China to ensure more
people have access to E-commerce channels via
Internet.
Ensuring proper skill development so that a huge
chunk of the workforce can become a part of the
E-commerce market
Individual Institutions can educate the villagers
about the advantages of E-commerce and training
people in digital technologies should go a long
way in expanding the E-commerce market in India

28. What are the challenges involved in adopting the Chinese e-commerce model, given the
unique characteristics that differentiate India from china?
Reluctance
• Indians are generally
reluctant to buy online.
• Especially in the rural areas
people believe more in
buying what is seen rather
than online
Higher Return Rate
• The return rate of products
due to various reasons is
higher.
• On an average in India around
30 percent of the products are
returned due to various
reasons which is an issue and
costs more in reverse logistics
Mode of Payment
• The major mode of payment is
still cash in India.
• In china, the dominant mode
is cash but there is almost an
equal no. of digital and card
payments with options such
as Alipay and Wepay already
penetrating deep even in rural
areas

29. THANK YOU
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